Marine

Clive Washbourn
Head of marine

 With one of the most experienced teams at Lloyd’s, we achieved an improved combined ratio in 2010.

$261.7m Gross premiums written

Our marine division, led by Clive Washbourn, delivered another excellent performance in 2010, achieving a combined ratio of 71% (2009: 74%) on gross premiums of $261.7m. The team is among the most experienced at Lloyd’s, leading 53% of business underwritten and covering risks that include marine hull, liability and cargo; energy; and war and terrorism risks for both ships and aircraft. Within our liability account, we have a growing book of professional liability business, protecting organisations involved in marine trade and in shipbuilding – from marine surveyors to shipyards – against financial liability arising from a breach of their professional duties.

Our marine hull and cargo underwriters had a successful year, despite a depressed freight market. Global demand has been stronger in the bulk transport sector, where we have focused, than in the containerised sector. Risk selection is ever more important: as economic pressures on ship owners have risen, some have cut expenditures on upkeep sharply, resulting in more breakdowns. Our ship construction portfolio has also shrunk as fewer ships with smaller contract values have been ordered.

War risks business, which includes piracy risks on maritime trade routes, has remained profitable and demand is high. Lloyd’s is by a large margin the world’s pre-eminent market for marine war risks and we play an active role in this market, offering expert consulting and negotiation services to our clients as well as insurance cover.

In the energy market, premium rates remain strong, having risen by 9% in the Gulf of Mexico following the Deepwater Horizon oil rig explosion in April. Deepwater Horizon was not a large loss for us but its effect on pricing in the market has been significant. Our Oslo office, which we opened at the beginning of 2010 to access Scandinavian energy business that is normally retained in the local market, wrote $4.2m of premium during 2010.

In addition to our London presence, we now have four regional offices in the UK, focusing on cargo business, as well as the office in Oslo and an office in Hong Kong. Our Hong Kong office has been successful in developing our position in the Asian cargo market; in the UK our portfolio has been slower to develop and a focus of the team in 2011 will be to strengthen broker relationships to access a larger share of this business.

In 2009 we established a new team focusing on marine professional liability risks under Zareena Hussain. This is not business that has historically been insured at Lloyd’s and we are delighted to be playing a role in developing the market. The strength of Beazley’s specialty lines division in non-marine professional liability, where we are a recognised market leader, has proved a source of credibility and valuable broker introductions to the team. At the end of the year, we put Zareena and her team in charge of our entire marine liability book.

Our claims capabilities are critical to our reputation in the eyes of both brokers and clients. In our market, insureds and insurers have an important shared interest at the time a claim is made. The more rapidly the claim is reported and adjusted, the sooner the insured will be paid and – often – the lower the overall cost of the claim will be. We pride ourselves on settling valid claims swiftly.

The longest voyage

Roll-on, roll-off car ferries do not routinely make 12,000 mile voyages.  But at the end of their useful lives, a surprisingly large number of such vessels find themselves on epic journeys across the high seas, bound for the west coast of northern India to be demolished.

Beazley has long been a leading insurer in the London market of so-called single voyage risks for such vessels.  They can give rise to some complex claims.  In one recent case, a German-made roll-on, roll-off ferry that had been sold for scrap set out from Mayaguez, Puerto Rico on 31 July 2010 and, at the time of writing, has still to make port at Alang in Gujarat. 

The vessel’s journey across the Atlantic was plagued by mechanical difficulties and took nearly three months.  On 20 October 2010 she dropped anchor in Table Bay off Cape Town, where – lacking propulsion – she came close to running aground when the anchor failed to hold.  Following repairs to the starboard main engine turbocharger, she once again took to sea on 31 October.

During the next stage of the ship’s eventful voyage, Beazley’s in-house marine surveyor, Kelvin Euridge, had to fly to Diego Suarez in northern Madagascar to investigate why the vessel had once again lost power.  He recommended the despatch of two package generators from Durban in South Africa to enable the ship to attempt the final leg of her journey across the Indian Ocean.

Most single voyage risks are less eventful than this.  But due to the relatively poor condition of the vessels that have been sold for scrap, they can prove challenging to insure.  Over a number of years, Beazley’s marine team has won recognition in the market as the foremost insurer of such hard to place risks.